Dili, July 8, 2008 -- On Monday July 7 at 9am, approximately 100 students held a
protest on their campus, the East Timor National University, against the
members of the national parliament. The students are not happy about
the MPs who are about to buy a imported luxury car each for themselves. The students protested peacefully by holding banners, yet 21
students were detained by the Timorese National Police.

Timorese law states that there may be no demonstrations within 100
metres of government buildings. However the students were protesting on
their own campus. The location of the campus is indeed less than 100
metres from the National Parliament; however this is the students'
campus, an important place for expression of free speech and
demonstrations.

It is not clear who issued the order to arrest the students but it is
widely believed that the order came from Prime Minister Xanana Gusmao
himself.

On May 23, 2008, the Council of Ministers approved the final draft
of the Mid Year Budget 2008. The total proposed amount is US$773.3 million, to be spent as follows: $59.4 million for 12,600 civil
servants' salaries, including police and defence forces; $240 million
for the food crisis and $207.4 million for goods and services; $1.4
million will buy luxury cars for each member of the
National Parliament; $114.7 million for infrastructure development
and $112.2 million for pensions and other social security.

The Gusmao government has cut domestic income tax to almost
10% flat rate and spent almost 30% of the Petroleum Fund to cover its
budget deficit. The
Petroleum Fund was established by the previous Fretilin government. But now the fund is under threat. In order to be
sustainable, only $396 million should be taken out of the fund this
year, however the Gusmao government has taken an extra $290.7 million
to balance the prices of construction material and to assist in the
food crisis, through tasking his friend, the vice-secretary general of the
CNRT, to purchase rice in Asian countries without tender.

The continuing inability of the government to carry out the previous
budget did not stop Gusmao increasing budget allocations. Only $31.9
million from $347.5 million of budget allocations has actually been executed
for this first trimester. The previous execution of the Gusmao
government's transitional budget was not certified by the Delloitte
Company, which usually certifies the execution report from the Timorese
government.

The issues of the purchase of luxury cars and the Petroleum Fund are
now big issues in the country. Civil society, media and the Timorese
people have criticised this budget, but the academics are silent
because their money comes from the government. In turn, the minister of
education Joao Cancio has criticised the students, and asked them not
to use the campus as a place for demonstrations. Ironically this
minister was previously the Head of the Dili Institute Technology, one
of the country's universities.

The student demonstrations are continuing. The police continue to
protect the parliament zone and have arrested more than 17 students in
this morning. The crackdown on the students is ironic, considering the pivotal role
that students played in East Timor's struggle for independence, a role
that PM Gusmao himself has previously acknowledged.